Bridging Conglomerates and Startups

November 23, 2020

3 min read

“Conglomerates have an opportunity to provide significant value to a startup beyond mere investment dollars through strategic involvement leading to precious traction."

MATTHEW KOLLING
Chief Investment Officer at UBX and
Head of Investments at Aboitiz Group of Companies

Matt began his career with Morgan Stanley as an Investment Banking Analyst and then continued as a Venture Associate for Morgan Stanley Venture Partners. He has 20+ years of transaction and investing experience, holding senior positions at Providence Equity Partners, Primeiro Partners, and LLK Partners. Matt was also the co-founding CFO of Ledger Atlas, a Draper-backed startup. He joined the Aboitiz Group in 2019 and appointed as CIO of UBX in 2020. He is also the Screening Committee Chair of the Manila Angel Investors Network.

THE INTERVIEW

Could you tell us more about the Aboitiz Group’s involvement in venture capital investing?

Our organization is guided by a principle of Advancing Businesses and Communities. The most visible recent VC activity of the overall organization has been through the UBX unit of UnionBank. UBX is prominent in the VC ecosystem due to our position as the digital-enablement vector of Philippine businesses and bank account access vector of Philippine startups. As a strategic investor, we are uniquely positioned to develop mutual benefit with an investee-startup. We made our VC investing bet accordingly.

Could you talk about the increasing investor participation in VC among the large Philippine conglomerates?

Thoughtful incumbents in the Philippines have acknowledged the value of ideas and talent that comes from involvement with startups. Conglomerates have an opportunity to provide significant value to a startup beyond mere investment dollars through strategic involvement leading to precious traction. When the incumbent organization commits to pursuing this activity, they become a viable destination for expert talent in the VC space and set themselves up to make a confident organizational bet on further involvement. For UBX, we are recently entertaining inquiries from foreign investors looking to enter PH through us.

How has the investment environment been affected by Covid-19 and what could it mean for our investors?

Unfortunately for founders, getting to “yes” from an investor has gotten more difficult for startups because skilled investors are focused on cash runway and funding risks within their existing portfolio. Investors have recently gotten bombarded by founders who are devising or pivoting to a COVID-topical solution. The associated hype often causes market noise and heightens investor susceptibility to FOMO and obsession over social cues.

What startup sectors do you consider most promising in the Philippines?

UnionBank is the first stop locally for Fintech startups given our comprehensive ecosystem enabling approach. The vast majority of startups seek commercial dialogue with UnionBank, UBX and Aboitiz units. We favor sectors that provide opportunity for a startup to establish a defensible position for themselves while providing something of value to users. As a strategic investor across our core sectors (Power, Food, Infra, Real Estate, Financial Services), we are confident that the next wave of successful local startups will discover a way to benefit themselves through leveraging business engagement with right-minded incumbents.

What does the Philippines need to take the startup ecosystem to the next level?

Additional successful startup exits will provide the greatest observable boost. At a higher level, there needs to be a change in mindset across the entire landscape to migrate away from legacy thinking and the “old way of doing things”. The whole point of a startup is to disrupt and innovate by marrying invention with economic opportunity. Startups can’t move fast and break things if they are drip-fed by investors and yet are expected to be profitable immediately while simultaneously conforming with myriad outdated rules and structures that are remnants of a bygone era.

The Aboitiz Group started in the late 1800s. Today, its investments are in power, banking and financial services, food, land, construction, shipbuilding, and infrastructure. It is recognized as among the best managed companies in the Philippines and in the region, consistently cited for its strong commitment to good corporate governance.